recession. i'm not a profit of doom. but as long as your politicians don't tell you the truth about the economy, i will. america could be headed to another recession and there may not be much that can you do to protect yourself. there is one thing you can do, understand how congress is dangling you over a fiscal cliff. i'm talking about a series of tax increases and spedding cuts that are mandated by congress to take effect starting january 1st. if congress doesn't act, if democrats and republicans can't get out of their own way, millions of middle class taxpayers will revert to higher income tax rates in the midst of an economic slowdown when those bueschs bush era tax cuts expire. many people could face even higher tax bills because more of you will have your income assessed at the alternative minimum tax rate. and there's continued bad news for retirees and those of who you rely on dividend paying stocks. you could see your tax bills

double. that's not all. because congress couldn't agree on how to cut the budget as much as a trillion dollars in across the board mandatory spending cuts could kick in starting january 1st and that could fuel a wave of job cuts. all of this is avoidable. congress could rid us of this uncertainty right now. but why eliminate uncertainty when you can use that uncertainty to scare people into voting for you or voting against the other guy? washington won't act before the elections because members of congress would prefer to play russian roulette with the american people in order to get votes. your vote should go to a congressional candidate who is willing to put the economic good over election year politics. harvard economist is a former imf chief economist and the world's leading authority on financial crisis. krista freeland and will cain is a cnn contributor and is so wrong about the truth of this congress that i insist he comes

on until i can convince him otherwise. welcome to all of you. >> bravo you for having background music to your sermon this week. i feel like we're about to land on an asteroid. >> i would like to know where the asteroid is coming from. we have a, in my opinion, we're calling it storms. we have two storms. we have the one over europe that is getting big. it is hitting us. the waves are higher. the winds are stronger. and then we have this one coming out of washington which teams entirely avoidable and fixable. what's your thought? >> the one in washington is contrived. on the other hand, it reflects our politics and our voters which are incredibly divided. so i don't think we're going to go off the fiscal cliff. but i'm not sure. maybe we'll get to next year and they'll say well we're not -- we're going to do it retro actively. a lot of stuff will start unwinding. europe, that's aeeper problem. there's years there. >> i'm not sure is the problem. it's likely that they will fix it. it's likely it will be at the 11th or 12th or 14th hour that they'll deal with all of these

things. decisions have to be made ahead of that. >> what if it's another patch that fixes it for six months or a year and leaves it hanging over the longer term? >> will cane, this is my attempt to get you to come to my side. we're dealing with the fiscal cliff now. it comes with a cost. >> it does come with a cost. first, i can't match your outrage on the fiscal cliff for two reasons. number one, i think it will be resolved. i think ken suggested because there's not any political benefit to not solving it. across the aisle, republicans and democrats, there will be an impetus to solve the fiscal cliff. i think we have to analyze the potential cost. if you extend the cost or avoid going over, you ramp up this deficit spending which doesn't have a problem right now. ken has written about. this potentially, as you continue to rack up debt, it will have a depressing effect on your economy. you have to balance that against the immediate potential recession of going over the fiscal cliff. >> generally speaking, we've all agreed that this balancing thing you're doing with your hands is exactly what we have to do.

we can't have serious cuts right now. we do need to deal with our budget in the long term and our deficits and debt in the long term. and in the middle, we need to give people some ability to plan. >> yeah. >> i totally agree with you. but we don't do that. we continue to, as and i talked about, handle the short term problem. i imagine we'll avoid going over the cliff and never address our long term problems. >> i would like to jump in for a minute and say i think we really have to get the budget deficit issue in perspective and understand how it fits into where the u.s. and the world economy are right now. the reality is all of the warnings about how the bond vigilantes were coming awful the u.s., those have not materialized. the truth is people are practically paying the u.s. government money. >> they are. >> right. >> the ten year bond returns you less. >> people are paying the u.s. government money. hang on, will, to hold on to their money. the clear and present danger is

not at this moment the budget. sure, medium term you have to worry about it. but right now any sensible person needs to be much more worries about two things, one, overall the world economy. is it going to go into a recession or depression? and number two, this is nontrivial, the lost generation of people who are not getting jobs right now, of children who are not getting educated. it's really easy to talk in abstract terms and to be like the brave courageous deficit cutter. but that is not the challenge for 2013. >> how do we balance that out? ken, what is your view of this -- it's not the first time in history we face the got cut later. how do we make the tough decision? where do we transit from? lots of government money into no government money and higher taxes? >> we especially don't want to do it all at once. the fiscal cliff is crazy. on the other hand, it's not a

free lunch just expanding, digging ditches. you need to have, you know, things that you're spending on that make sense. there's a lot of things congress could do but doesn't do. and that is simplifying the tax system would help a lot and making it fair at the same time. we could improve the inf infrastructure. we have this incredible bonanza from energy that might make us an oil exporter for a little while. we could bring manufacturing back. but everything sort of frozen at the moment because the government is so paralyzed. >> but everything is frozen. all of the measures that ken talk about, broad agreement needs to be done. with all due respect, they're not abstract. these are problems that must be dealt with and the reason they're not is because we're always dealing with emergency situations. we're always dealing with the next fiscal cliff, the next need for quantitative easing. we always put these things on the front burner. >> these are not all emergency situations.

consider the '90s. there have been times. the big problem at the end of the 90s and early turn of this century was a budget surplus. we must not assume that the conditions that prevail today are the conditions that are going to prevail forever. >> there are long term problems. >> actually, there was a budget surplus. i'm afraid it was george bush who xwasquandered that money an that is the not american way. i think ken made a central point which to me is the counter to ali's storm warnings. for me, actually i am pretty bullish about the u.s. economy. and i'm bullish because of this energy revolution which is coming. i don't that i that is sort of fully taken into account in our economic discourse. but the shale gas is really going to transform the economics of the u.s. in the world economy. >> because nobody knows where krista comes from. she comes from the oil sands in canada. she knows what an energy

revolution looks like. my point is i agree with you on that. i think energy is a great story. i think congress can mess things up and it will hurt if we don't fix it. congress's failings take action to protect americans from an on coming storm. i'll show what you jobs are at risk and whether your state could be the hardest hit. plus that hammering you're hearing could be the sound of a real heartbeat in the housing market. stick around. ♪ ♪ [ male announcer ] its lightweight construction makes it nimble... ♪ its road gripping performance makes it a cadillac. introducing the all-new cadillac xts. available with advanced haldex all-wheel drive. [ engine revving ] it's bringing the future forward.

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wouldn't it be nice if there was an easier, less-expensive option than using a traditional lawyer? well, legalzoom came up with a better way. we took the best of the old and combined it with modern technology. together you get quality services on your terms, with total customer support. legalzoom documents have been accepted in all 50 states, and they're backed by a 100% satisfaction guarantee. so go to legalzoom.com today and see for yourself. it's law that just makes sense. . i've been harping on about this fiscal cliff. let's talk about what it means to you, the threat of the so-called fiscal cliff, just the threat of it could cost you your job. christine romans joins us now. what happens if we go over the fiscal cliff? >> it would beter inl, first of all. let's focus on the sequester. that is mandatory spending cuts that automatically kick in if congress doesn't act. they're estimated to be $1

trillion in cuts over several years splitting between defense and nondefense programs. the cuts will lead to immediate reductions in procurement spending in the private sector which could result in two million direct job losses in fiscal year 2012 and 2013 including professional and business services, maybe half a million jobs lost there. manufacturing jobs, an estimated 350,000 lost there. it would, of course, hit federal workers very hard, about 300,000 jobs lost there. suppliers and vendors that do business with federal agencies and contractors could see their own indirect losses as a result. where would these job losses be? california, virginia, texas, maryland, the district of columbia. they would each lose 100,000 jobs. and if congress eventually addresses sequester saying if the lame duck session after november's election or early next year, it may be too late to avoid a round of job losses

because the federal warren act requires businesses with more than 100 employees must notify workers 60 days in advance. that means since sequester takes infect on january 2, layoff notices would start coming out the first week of november just in time for voters going to the polls. >> come over here and join us. one thing that ken says is probably deal with these things. but you're not sure they'll deal with them. and that's where the problem comes in. this warren act means some companies may have to lay people off. >> that's a frightening story that they actual sli to start acting in november. there's an awfully good chance they won't figure out what to do until really the beginning of the year because we're going to need to see the election before they have any kind of big deal. and then they're going to want to have the lame duck congress pass it. they're not going to want to do that probably. then we'll get into the year. there will be wrangling for a while. and a lot of stuff unfolds. >> it's more likely it will do something to change the warren

act than change the actual problem. so that nobody has to go out and have layoff notice on their hands right before an election. >> that worries you more. if you're one of the people who works in one of the industries, people like to say government cuts. these are not government cuts. when you cut government spending, these are private sector workers. >> our government is addicted to contract workers. >> you're a contract worker for the government, will. you're sitting here with that same uncertainty saying am i going to lose my job at some point? christian took a piece out of you talking about these are not abstractions. they're real jobs and real people's livelihoods that will be affected because of some idea we have to get the debt under control right now. >> i was pausing. there is a cost benefit analysis. this debt we're racking up, that we'll continue to rack up at a greater pace should we extend the fiscal cliff, not go over it, has an effect on economists. ken wrote about this. it's not just the bond markets krista brought up. >> he is trying to ligitamize i had argument. >> it has a depressing effect on your economy. i recognize that you have

moments in the economies when you can't take a hickey, you can't take a hit. we had that in '08 and several time in our past. christian made the argument, we're there again. you can't let the fiscal cliff push us over. my question is simple. i don't have the answer. i'm sure ken does. which is the bigger hickey to take, the long term one where we continue to rack up debt or the possible 3.5% contraction in gdp, the recession for the fiscal cliff? >> let's ask the expert. what is the compromise? >> you have to do something much more garage you'll here. not only are we barely growing 1.5% the most recent number. but the rest of the world is slowing down. this isn't a time to sort of contract artificially. this is a poison. it's completely contrived. congress couldn't agree. they said to make sure we agree we'll put in this. >> we'll put in the poison pill. generally you're not supposed to have to take it. it is supposed to force you into hard decisions. >> do you believe that? >> back to will's point which is

compelling though i think not fully thought out where you say we can't always act like we're in an emergency. you sthed many times with respect to unemployment insurance benefits. what do you do in the case that it is kind of emergencyish? the patients, it's like saying i can't keep trading this patient who isn't stabilizing. >> here's what makes me crazy. they only see two things, deficit reduction and debt control or the fiscal cliff. and we have people who represent us in congress who are supposed to be able to figure something out somewhere between that. and we have an emergency in the economy right now with europe and a lot of other things happening in our own domestic economy. i mean it's like malpractice. it's like congressional malpracti malpractice. >> that would be ideal. >> that's a good word. >> that's a good word. >> i would love to handle both of the problems at the same time. i buy it. we're in an emergency. can you not go over the fiscal cliff. i think our other problems are not abstract. i think when you purchase this avoidance, you have to understand the price you pay. >> i think you're right about

that. you know what? when we gave the bush tax cuts, we purchased avoidance. the bush tax cuts and the wars are a big part of our projected debt. so we have to always decide in good times and in bad that if there are unintended consequences, the things we do. doinlt know, ken. i'm sure the government employees very smart economists and you can't all have different opinions on this thing. i mean at some point doesn't the economist come into the room yelling? guys, you can't do this even if it gets you votes. it's wrong. as christine says, malpractice. >> who is going to pay the taxes? that's what the real fight is over and how are we going to pay taxes? everyone is trying to protect their special interest. congress doesn't want to give up all the exemptions. that lets them give favors to people who give them money under the table so people don't understand it. we have to fix the tax system. and they have avoided that. the bowls simpson came out. they made a proposal and it didn't go anywhere. >> they don't feel the emergency right now. bond yields are so low. we can borrow money super cheap. they see an emergency in europe.

they see an emergency in greece and spain. we don't feel it yet here. >> which goes to your point, will. you're trying to make the point that this is important. this is urgent that we deal with this debt and deficit issue. it doesn't feel as urgent as getting people jobs. >> it's about economic growth as well. this is a patch. that's the point. the fiscal cliff thing, it's a patch. it doesn't aggress the real problems that he's mentioned several times with tax reform or entitlement reform. they lay the groundwork for real economic growth. >> you heard it here first. you're going to see that a lot on my show. >> g as long as you give me credit. >> don't go anywhere. ken, great to see new person. real treat for us. >> glad you got to see me. >> always. glad i got to see you, too. coming up, as home prices improve and mortgage rates hit a new record low, you may finally be able to sell your house. but should you be buying a new one? report after report says the housing report is going up but they say don't buy just yet. we'll hear from him just on the other side. [ male announcer ] research suggests the health of our cells plays a key role

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. everybody is complaining that i'm being doom and gloom about the economy. house sgt one array of economic hope in our environment. buying a house may not make you rich again for a long time. but most indicators suggest that housing is coming back. some of them suggest housing is on a terror. shares of home building stocks have surged an average of 49% this year as investors continue to bet on a rebound. we're seeing it in the auto industry. home construction is driving truck sales higher. the big three saw sales of full sized pickup trucks jump 13% in the first half of the year after a very strong december. we're seeing it in retail. lumber liquidateors smashed quarterly profit estimates as same store sales surged 12%. home depot shares up 27% this year. let's bring in christine romans. christine, housing looks like it's back. am i wrong? >> helping you prove your case, they make the call that the bottom is in.

why? one piece of evidence, home values are up for the first time in five years. look at that after losing a quarter vam u. a little uptick in home values here. that's one of the reasons why they're saying a bottom is reached. here's what the country looks like. green, ali. these are the markets that they say hit bottom. look in parlts of california, arizona, phoenix. phoenix prices up 10%. parts of colorado, even over here in florida, you know, kind of ground zero to the real estate speculative boom and then bust. you're seeing some recovery there. red on this map, anywhere you see red, ali, this means there is no bottom. not even in the next 12 months. homes now are more affordable than they've ever been in 20 years measured against median income. if you have a job and savings, it's a good time to buy. and that housing affordability number is pretty good for you overall. one last thing here. mortgage rates. mortgage rates have never been cheaper. 30-year money, 3.49% on a

30-year fixed rate loan. a new record. ali, all the ingredients are there now we just have to bake in a recovery. >> and that is the trick. you can have almost all the ingredients or not the right temperature in the oven and your cake doesn't get baked. christine, stick around. i want to talk housing more. i want to bring in bob schiller. he is the co-founder of the famous s & p case schiller home price index which saw the first uptick in seven months in april. bob, sales hit a blip in june. declining after a string of gains. but it seems to me that the vast majority of evidence suggests that housing is back. >> well, i agree there is a lot of positive indicators. and that housing prices will probably go up through the summer at least. but i know what you mean housing is back. this suggests -- i hear it from a lot of people that we're off to the races again. i think a much more likely prospect is disappointing at

best. the cme futures market has it going up, you know, 1% or 2% a year. just keeping pace with inflation. that's not exciting. why are you so excited? >> because we think -- the reason we're so excited, you're actually the expert on this. the reason we're so excited is because housing creates -- housing prices going up are one of the legs of the prosperity tool. it's the thing that makes us feel better. ooze either going up or down. you're saying maybe goes up for a long time at such a slow rate it will make no difference to anybody. >> this is a problem being a forecaster. you usually have to give bland forecasts. so yeah, it might go up a couple percent a year. i'm not excited by that. but after your basic question, should you buy a house now? i would say if you are interested in buying a house, christine is exactly right. it's affordable. we don't know which way it's going to go. you may as well just do it. >> you gave a lot of evidence as

to why prices are coming back and sales are increasing. but in the end you can have most of the ingredients in the cake. there is one ingredient bigger than all others when it comes to a housing recovery and that is -- >> your job and jobs recovery. you're not going to have a full real recovery in the housing market until you have a jobs recovery. you need a job to pay the mortgage. >> to get a mortgage. >> unless you're independently wealthy. and that's where a lot of the action in the housing market has been. cash buyers and foreign buyers. it's not been joe and jane and their two little kids and their job in the subushgz. it's been someone else. so jobs in savings i think are the most important thing here. and, you know, bob and i talked about this before. i feel like there are two housing markets here. the distress the housing market and then there is this other housing market where people are having an opportunity. but those people have savings and a job. and it's almost a two-speed recovery in housing. there is some opportunity for some but a lot of the same devastation for everyone elimination. >> robert schiller is the

economics professor at yale university. he is author of a great book. always good to see you. christine, thank you as wm. all right. t.a.r.p., the troubled asset recession program. washington band oabandoned you order to save the banks. our next guest will make his case next. opportunity to affect what happens in a major city. if you want to make a difference, you have to have the right education. university of phoenix opened the door. my name is james craig, i am committed to making a difference, and i am a phoenix. visit phoenix.edu to find the program that's right for you. enroll now.

. so if you're still watching me and there is some chance that you believe we could get hit by another massive economic storm. a lot of people think the last recession wasn't worse than it was because the government stepped in with t.a.r.p., the troubled asset relief program. in a new book the man who served as the official watchdog for the treasury department's economic crisis response says that $700 billion t.a.r.p. program may have caused more problems than it solved. i'm going to talk to him in a minute. t.a.r.p. gave the banks money,

encouraged them to lend it out to keep americans in their homes running their businesses, going to college and buying cars. here's the scene from too big to fail, movie that portrayed an exchange between ben bernanke and then treasury secretary hank paulson. >> why don't they use the money we're asking them to? they will. lend it out, won't they? >> of course they will. >> four years after the crash, credit is still tight. americans who want to become homeowners still have trouble getting mortgages. taxpayers, that's you, still own part of the companies that got bailed out. you own one-third of general motors. 61% of aig and nearly three quarters of ally financial and you continue to pay for the bailout. the congressional budget office estimates that t.a.r.p. will end up costing $32 billion. the treasury's estimate is higher, $70 billion.

the special investigator general assigned to monitor t.a.r.p. is now joined the ranks of the krit wikz a new book called "bailout: inside account of how washington abandoned main street while rescuing wall street." welcome to the show. the problem back then very clearly like the name of the movie that i just showed that clip from was too big to fail. four years ago the assets of the five largest u.s. banks were $6 trillion. now they're $8.5 trillion. the banks are bigger than they were then. if they were too big to fail then, they're much bigger now. >> exactly. this was the policy response of our government. a government which is detailed in the book is really puts the interest and defers the trf the largest financial institutions over that of the taxpayer. and they have grown the banks bigger with the government support. and as we know, t.a.r.p. is supposed to do a lot more than just shovel money into the capital holes of the banks. it is supposed to protect the system and help the economy. as we know, the only real policy

ties to that goal was what you saw in that clip. >> right. >> a hope. but they didn't do the -- >> could it have been done -- we may get into the situation again, i hope not. could it have been done in some fashion that had more of -- more than a hope attached to it that we're going to give you access to all this capital in the midst of a credit freeze where no one could bore roy money from anyone but you have to do something in terms of lending it out to people. >> absolutely. this money was given with no string as tached. when i went down and started making recommendations about this these things and anti-fraud provisions, i met with such steely resistance. an incentive to lend the money or requirement to lend the money out to the economy. the answers i would get no matter what the subject was was always the same. it really crossed administrations. irwas told no we don't need to do. that we don't need to have conditions or transparency. >> why were the administrations so differential to the banks? we like to see in political commercials that we're not, that they're the 1%. they're the problem.

but why -- you were inside. you say that treasury is highly differential to the banks. >> exactly. the response is we don't have to worry, the bank was never embarrass themselves. they would never risk the reputations. part of the problem is the big revolving door between washington and wall street. it's not a democrat problem or republican problem. but so many of these individuals come from the very same banks -- >> will breaking them up make any difference? you go from 20 big banks to 50 or 80 smaller but still influential banks, all of whom have the same interest. they lobby the same way. they take the same position on things. they don't tend to differ. >> the difference is if you have what -- what we have are the bank that's are too big to fail. if anything happens to one of them, they lose so much money or get in trouble with the law, they go down and bring the whole system down. >> the economy suffers. >> distorts all the incentives. as a result, they can take more risks than they normally would because of that guarantee. actually important, we see the parade of financial scandals every day. they can't be charged.

they can't be held criminally accountable. united states government wants to indict one of the banks, boom, economy over. >> sandy while, you heard it already. he is a former ceo of citigroup. a poster child for too big to fail. he agrees. he says he wants to break the banks up. listen to what he has to say. >> so i think what we should probably do is go and split up investment banking from banking and have banks do something that's not going to risk the taxpayer dollars. that's not going to be too big to fail. >> he's talking about the volker rule. very weird. strangely, he said he is making no further comment than that interview he did. what do you make of that sea change? >> i think there is just this growing recognition that we have to break up the banks in order to have a better economy. better off for shareholders and investors. >> does anybody suffer? don't bankers still make lots of snn. >> under this current model, the too big to bank and the

executives make more money because they get what's essentially a subsidy from the assumption that they'll be guaranteed. they get this immunity from prosecution to a certain extent because of the fears. you take that away, they individually will suffer. but it's very interesting. if you've seen this happen, more and more economists, regulators, specials inspectors general come on the site, who is left? the big banks and the enablers in washington. the united states treasury department which fought against bipartisan effort to break up the banks, they're among the very few people still on the sides of keeping what is a very, very broken status club. >> you write i realize the american people should lose faith in their government. senior fellow at nyu law school and author of "bailout" good to have you here. >> thank you. >> the store may be hitting regardless. which is a bigger threat to the u.s. economy right now europe or the fiscal cliff? only one may be in your power to

control. plus, could facebook's flop be your gain? we go past the earnings breakdown and get the answer to the one question you want to know is it time to buy facebook stock? 's a cattle guard, take a right. do you have any idea where you're going ? wherever the wind takes me. this is so off course. nature can surprise you sometimes... next time, you drive. next time, signal your turn. ...that's why we got a subaru. love wherever the road takes you. wouldn't it be nice if there was an easier, less-expensive option than using a traditional lawyer? well, legalzoom came up with a better way. we took the best of the old and combined it with modern technology. together you get quality services on your terms, with total customer support. legalzoom documents have been accepted in all 50 states, and they're backed by a 100% satisfaction guarantee. so go to legalzoom.com today and see for yourself.

it's law that just makes sense.

. you heard me say this before. right now there are two urgent storm clouds threatening your prosperity, one of them is europe's debt crisis. the other one is the fiscal cliff that we are headed over if congress doesn't act. now the international monetary fund has made its voice clear f congress fails to avoid the fiscal cliff, u.s. growth will hit the skids coming in well below 1% and quite possibly taking down the rest of the fragile world economy with it.

treasury secretary tim geithner is emphasizing the other view. he thinks europe is the bigger threat telling congress this week that europe is hurting growth and tightening financial conditions and that is exacerbating the global economic slowdown. so how about a little cross atlantic debate? richard quest joins me. richard, the question is this. which is the bigger threat to the u.s. economy and hence the global economy? what you guys are doing in europe or the fiscal cliff in the united states and given it is my show, i'll go first. control room? give me 60 seconds on the glock. all right. richard, i know you europeans are self important. the fiscal cliff is, in fact, the bigger clet. we're ta threat. we're talking about a half a trillion threat to the u.s. economy alone. if our congress does not act by january 1st, a mix of huge tax hikes, massive budget cuts will

take effect and that's going to push the u.s. economy back into a recession. those job cuts will be fast and furious, at least a million private sector jobs lost by 2014. some people say two million jobs. and every single day brings us closer to impending disaster even as the american consumer is already, as you know richard, pulling back. retail sales declined now for three months in a row. now i'm not saying -- i know you're upset about this. i'm not saying that europe is not a major concern. we've had selloffs because of your business over there. but major indices are still up for the year. we don't know what's going to happen if greece exits the ear yoe or spain needs a bigger bailout. but the point, richard, is we can't do much about either. the u.s. can fix its problems right now. >> all right. you are once again delusional and devoid of reason. if you give me 60 seconds on the clock, i will put you right. the truth of the matter is it's

a silly question. it's like saying which is better, the devil or the deep blue sea? being caught between the rock and the proverbial hard place. the reality, of course, is that the particular moment when you and i are talking, it's another euro zone crisis that is the most serious. for one simple reason. 17 countries, 27 in the european union and inability to disagree, central bank knots doinot doing necessary. to date euro zone is more serious. but the fiscal cliff becomes more serious later in the year. and you missed one very important point. >> what's that? >> they're both serious because they are structural, not cyclical. solving both the fiscal cliff and the euro zone crisis would involve major political upheavels and decisions, the sort of leadership that's been singularly lacking on both sides of the atlantic so far today. >> you had three seconds to

spare. you make a good point. we will agree that there's -- >> i proved a point. i've proivven a point. >> you are right. these are both very serious issues. so where we probably differ here is not that one is more serious than the other but at the time and place that we're at right now, europe is the bigger threat as we get closer to where this fiscal cliff happens at the end of the year starting december 31st, january 1st, it may become more important. you disagree? >> i do disagree. solving that fiscal cliff problem really comes down to five elements. the president, the congress, congress, republicans and the democrats. so solving the fiscal cliff is actually quite a small tight narrow body. seems a lot. you take the euro zone with its 17 countries, the ecb, all the different other bodies, the imf,

everybody. then you realize why in -- i come back to what i said before. the way the u.s. solved the great recession with t.a.r.p., stimulus, dodd/frank is a model compared to the europeans' inactivity zbchlt well said. we'll make this a habit. richard quest, host of "quest means business" joining me from london. facebook's stock flopped since it opened in may. now we have real earnings information, is this the time to get it? is the stock a bargain? i'll tell you on the other side. ? ? instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. people don't like to miss out on money that should have been theirs. that's why at ally we have the raise your rate 2-year cd. you can get a one-time rate increase if our two-year rate goes up. if your bank makes you miss out, you need an ally. ally bank. no nonsense. just people sense.

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yes, they made over a billion dollar, but they have over 955 million years. when your sales can't keep up with your year, you've got a business problem.year, you've g business problem. i actually think facebook will figure this out eventually. but for now, the company has a lot of work to do. now, listen, i like facebook. i use facebook a lot. i ask you to come to my facebook page every show. i'm just tired of talking about whether facebook is a good stock to buy or not. but my producer says you're not tired of hearing about it, so i'm going to talk about it one more time until the company starts making real money and earning a real profit. and i'm going to bring in smart people to talk about it with me. matt mccall is the president of penn financial group. ned riley is the chairman of riley asset management. good as to to see you. my you viewers only care about one thing, is in the time to buy facebook stock. matt, if you ownyou viewers onl

one thing, is in the time to buy facebook stock. matt, if you ownou viewers onlye thing, is in the time to buy facebook stock. matt, if you ownu viewers only thing, is in the time to buy facebook stock. matt, if you own viewers only c thing, is in the time to buy facebook stock. matt, if you own facebook stock, would you buy, would you sell or would you hold? >> one thing i'm definitely not doing if i own some, i'm not doubling down. never a good strategy. i would probably hold here because we're getting whacked after the earnings report. we might get a bounce next week. so hold on. >> so i'll put a sir kem around t circle around the hold. ned, assuming you own the stock, which assign ii'm assuming you . >> no, i don't. i said i wouldn't touch it in a year and my rationale is the same. they don't have the platform to generate revenue from the mobile phone area. they have a lot of competition in terms of others offering the social networks. i mean, they have sellers in the background, those that didn't par take in the ipo that are just eager now get out of this this stock. they thought it would be $5 $75

100. and now they're stuck at $22 when it was at $45. i didn't like it then, i don't like it now. unfortunately the only thing that could bail this company out is the takeover and nobody has the pockets yet. >> so if you were one of those people who bought it between $35 and $45, would you hold it, buy it, sell it? >> for the same i think that traders will make some money on this one, probably over the next six months, i'd hold it, but i would trade right out of the stock when we got up maybe into the 30s. but that's not a buy in my estimation. i'm a long term holder. and i'm not going to gamble on somebody else's foley. >> so both of you are saying if you happen to hold it at a price higher than where it is right now, stay holding it. let me ask you, ned, while you're there, is there a price at which you would buy this it will stock? it's trading in the low 20s. is there a price at which you would say there's value in it? >> i suppose at some point right now 60 times earning, earnings aren't growing, the model stinks

right at the moment, but the user base is huge. this company has done a good job at generating interest. but at a price and it depends on the fundamentals at that particular point, you have to anticipate because the market's going to beat you on the draw as well as any other stock. i might buy the stock maybe, but at what price, i could pay higher for it if i'm convinced that the company has all the wherewithal to be successful in the future. but right now -- >> if i could get it at a certain price, what would you fay for it today? >> probably around 1$12 to $15. >> i'd be willing to pay $17, $18 for facebook. the concern is similar to ned. the numbers are slowing down. we saw ad impressions down 2%. why are they drop something they're moving to moebl. they will eventually figure it

out, but it probably drops to the teens before they do. >> what do you think happens to the stop over time? really largely the same question because we have people who bought the stock and counselidos higher or low? >> i think it's lower in a year. probably high teens, high to mid teens. at that time, it's probably a flyer. put money into it. >> ned, what do you think? >> i think lower. i said it two months ago. and on the offering price it would be higher, lower, i'll stick with my guns on this one. however, this area is a growth area. it's just learning how to capitalize on the growth that's out there. and the demographics definitely favor a company like facebook. you just got to figure it out. >> how you make money and how much it's worth. so you'd probably hold and you think it's going lower and you're both guessing that it's

going lower thousand. but that's a choice people have to make about they own it. good to see you as always. not two guys who will be convinced to buy facebook. i say congress is threatening american workers. if you are ready to debate me, i'll show you how to do it next on your money. ♪ you want to save money on car insurance? no problem. you want to save money on rv insurance? no problem. you want to save money on motorcycle insurance? no problem. you want to find a place to park all these things?

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your congress refuses to act to save us from the potential economic storm that may be headed our way. congress' refusal to do anything about the combination of tax increase, spend cuts and potential job losses is sending you to the brink of a fiscal cliff that it has created. if congress worried more about saving your job than saving their own, they would take the steps to protect you today from the coming economic storm. i know you've got a strong opinion about whether or not i'm right. i hear from you every week. so do it again. tweet me right now. i read them all and i love to debate. thanks for joining the conversation this week on "your $$$$$."

we're here every saturday 1:00 p.m. eastern and sunday at 3:00 p.m. have a great weekend. you're in the cnn newsroom where the news unfolds live this saturday. our top story, new evidence now surfacing in the colorado movie theater massacre. the suspect, james holmes, was being treated by a psychiatrist at the university of colorado before the shooting that took 12 lives and injured dozens more. the psychiatrist who he was reportedly seeing has a chilling specialty, skchizophreniaschizo. >> reporter: will this all surfaced through a series of court motions. last monday, this notebook was delivered to the university. at that point, the police, aurora plaolice and the d.a.'s

office got this notebook and leaks afternopparently happened there were writings that he wanted to do some sort of violence.defense said there's a gag order, shouldn't be anything out there and this this is privileged material. that's where it stands. that will be determined at a hearing on monday. what will does tell us for sure is that he was seeking psychiatric care from this professor at the university. and that he did write some sort of thing in this notebook. beyond that, we're really not certain. we don't know how long he was seeing the psychiatrist terrorist or why. we have no indication at all that he was seeing her because he had any inclinations of doing violence or schizophrenia even though that was an expertise of the doctor's. still a lot to learn really about what was in this thoet book and why he was seeing the psychiatrist. >> and do we even know that he was seeing him as a patient or if he was seeing him as a